Download This Bill in Microsoft Word format
A73, R147, S549
STATUS INFORMATION
General Bill
Sponsors: Senators Land, Martin, J. Verne Smith, Hawkins and McConnell
Document Path: l:\council\bills\gjk\20453sd03.doc
Introduced in the Senate on April 2, 2003
Introduced in the House on April 30, 2003
Last Amended on June 5, 2003
Passed by the General Assembly on June 5, 2003
Governor's Action: June 25, 2003, Signed
Summary: Second Injury Fund
HISTORY OF LEGISLATIVE ACTIONS
Date Body Action Description with journal page number
-------------------------------------------------------------------------------
4/2/2003 Senate Introduced and read first time SJ-8
4/2/2003 Senate Referred to Committee on Judiciary SJ-8
4/23/2003 Senate Committee report: Favorable Judiciary SJ-23
4/24/2003 Senate Read second time SJ-51
4/24/2003 Senate Ordered to third reading with notice of amendments SJ-51
4/30/2003 Senate Read third time and sent to House SJ-27
4/30/2003 House Introduced and read first time HJ-103
4/30/2003 House Referred to Committee on Labor, Commerce and Industry
HJ-103
5/29/2003 House Committee report: Favorable with amendment Labor,
Commerce and Industry HJ-1
6/2/2003 Scrivener's error corrected
6/3/2003 House Requests for debate-Rep(s). FN Smith, Allen, Breeland,
Hosey, Cato, Clyburn, J Hines and JE Brown HJ-94
6/4/2003 House Requests for debate removed-Rep(s). JE Brown, Breeland,
Allen, FN Smith, Clyburn, Hosey and J Hines HJ-50
6/4/2003 House Debate adjourned HJ-51
6/4/2003 House Amended HJ-76
6/4/2003 House Read second time HJ-85
6/5/2003 House Read third time and returned to Senate with amendments
HJ-7
6/5/2003 Senate House amendment amended SJ-119
6/5/2003 Senate Returned to House with amendments SJ-119
6/5/2003 House Non-concurrence in Senate amendment HJ-210
6/5/2003 Senate Senate insists upon amendment and conference committee
appointed Martin, McGill, Malloy SJ-214
6/5/2003 House Conference committee appointed Reps. Tripp, Scarborough
and Young HJ-247
6/5/2003 House Conference report received and adopted HJ-283
6/5/2003 Senate Conference report received and adopted SJ-213
6/5/2003 House Ordered enrolled for ratification HJ-352
6/5/2003 Ratified R 147
6/9/2003 Scrivener's error corrected
6/25/2003 Signed By Governor
7/1/2003 Copies available
7/1/2003 Effective date See Act for Effective Date
7/2/2003 Act No. 73
View the latest legislative information at the LPITS web site
VERSIONS OF THIS BILL
4/2/2003
4/23/2003
5/29/2003
6/2/2003
6/4/2003
6/5/2003
6/5/2003-A
6/9/2003
(A73, R147, S549)
AN ACT TO AMEND SECTION 38-1-20, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO DEFINITIONS USED IN TITLE 38 PERTAINING TO INSURANCE, SO AS TO CHANGE THE DEFINITION OF "EXEMPT COMMERCIAL POLICIES" TO DELETE THE REQUIREMENT THAT THE DEFINITION INCLUDE POLICIES FOR WHICH PREMIUMS FOR ONE INSURED IS GREATER THAN FIFTY THOUSAND DOLLARS ANNUALLY; TO AMEND SECTION 38-7-20, RELATING TO INSURANCE PREMIUM TAXES, SO AS TO CHANGE THE BASIS ON WHICH THESE TAXES ARE ASSESSED ON PREMIUMS TO WRITTEN RATHER THAN COLLECTED; TO AMEND SECTION 38-21-170, AS AMENDED, RELATING TO REPORTING DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS TO THE DEPARTMENT, SO AS TO INCREASE FROM TEN TO FIFTEEN THE NUMBER OF DAYS BEFORE PAYMENT THE REPORT MUST BE GIVEN; TO AMEND SECTION 38-21-270, AS AMENDED, RELATING TO THE PAYMENT OF AN EXTRAORDINARY DIVIDEND OR DISTRIBUTION TO THE SHAREHOLDERS OF A DOMESTIC INSURER, SO AS TO CLARIFY THE DEPARTMENT OF INSURANCE REVIEW OF THIS TYPE OF DISTRIBUTION; TO AMEND SECTION 38-41-60, RELATING TO HOLDING IN TRUST FUNDS COLLECTED FROM PARTICIPATING EMPLOYERS UNDER MULTIPLE EMPLOYER SELF-INSURED HEALTH PLANS, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-10, AS AMENDED, RELATING TO PERSONS CONSIDERED AS INSURANCE AGENTS, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-40, AS AMENDED, RELATING TO THE RIGHT TO APPOINT PRODUCERS BY A LICENSED INSURER, SO AS TO REMOVE PROVISIONS THAT REQUIRE THE DIRECTOR OF THE DEPARTMENT OF INSURANCE TO APPROVE THE APPOINTMENT OF PRODUCERS BEFORE THEY TAKE RISK OR TRANSACT BUSINESS; TO AMEND SECTION 38-43-50, AS AMENDED, RELATING TO THE REQUIREMENT THAT APPLICANTS FOR A LIMITED LINE OR SPECIAL PRODUCER'S LICENSE MUST BE VOUCHED FOR BY AN OFFICIAL OR LICENSED REPRESENTATIVE OF THE INSURER FOR WHICH THE APPLICANT PROPOSES TO ACT, SO AS TO DELETE PROVISIONS REQUIRING THE APPLICANT TO BE APPOINTED BY AN OFFICIAL OR AUTHORIZED REPRESENTATIVE OF THE INSURER BEFORE THE APPLICANT CAN ACT AS A PRODUCER; TO AMEND SECTION 38-43-70, AS AMENDED, RELATING TO LICENSING OF A NONRESIDENT PRODUCER BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, SO AS TO CORRECT AN INTERNAL CODE CITATION; TO AMEND SECTION 38-43-100, AS AMENDED, RELATING TO THE APPLICATION FOR AND ISSUANCE OF A PRODUCERS' LICENSE BY THE DIRECTOR OF THE DEPARTMENT OF INSURANCE, SO AS TO DELETE CONFLICTING PROVISIONS THAT AUTHORIZE THE DIRECTOR TO WAIVE THE EXAMINATION AND ISSUE TEMPORARY LICENSES FOR A PERIOD NOT TO EXCEED NINETY DAYS; TO AMEND SECTION 38-43-105, AS AMENDED, RELATING TO EDUCATION REQUIREMENTS FOR LOCAL AND GENERAL INSURANCE AGENTS, SO AS TO DELETE CONFLICTING PROVISIONS AND CLARIFY WHO MUST COMPLY WITH PRE-LICENSING REQUIREMENTS; TO AMEND SECTION 38-43-106, AS AMENDED, RELATING TO CONTINUING EDUCATION REQUIREMENTS FOR INSURANCE AGENTS, SO AS TO SUBSTITUTE HOME STATE FOR RESIDENT STATE AS THE REQUIREMENT FOR SATISFYING RECIPROCAL CONTINUING INSURANCE EDUCATION REQUIREMENTS FOR NONRESIDENT PRODUCERS; TO AMEND SECTION 38-45-20, RELATING TO REQUIREMENTS FOR A RESIDENT TO BE LICENSED AS AN INSURANCE BROKER, SO AS TO DELETE THE TWO-YEAR WAITING PERIOD FOR RESIDENT SURPLUS LINES INSURANCE BROKERS AND TO REQUIRE SUCCESSFUL COMPLETION OF TWELVE HOURS OF CLASSROOM INSURANCE COURSES; TO AMEND SECTION 38-45-30, RELATING TO REQUIREMENTS FOR A NONRESIDENT INSURANCE BROKER, SO AS TO DELETE THE REQUIREMENT FOR NONRESIDENT BROKERS TO FURNISH A TEN THOUSAND DOLLAR SURETY BOND; TO AMEND SECTION 38-71-880, AS AMENDED, RELATING TO MEDICAL, SURGICAL, AND MENTAL HEALTH BENEFITS OFFERED IN CONNECTION WITH A GROUP HEALTH INSURANCE PLAN, SO AS TO EXTEND THE SUNSET PROVISION TO DECEMBER 31, 2003, TO COMPLY WITH FEDERAL LAW; TO AMEND SECTION 38-77-870, RELATING TO THE AVAILABILITY OF ASSIGNMENT OF RISKS TO NONRESIDENTS, SO AS TO PROVIDE AN EXCEPTION FOR MILITARY RISKS THAT ARE PRINCIPALLY GARAGED IN THIS STATE TO BE ASSIGNED BY THE PLAN; TO AMEND SECTION 38-79-420, RELATING TO THE CREATION OF THE SOUTH CAROLINA PATIENTS' COMPENSATION FUND, SO AS TO INCREASE FROM ONE TO TWO HUNDRED THOUSAND DOLLARS THE AMOUNT THE FUND PAYS IN EXCESS OF FOR EACH INCIDENT AND INCREASES FROM THREE TO SIX HUNDRED THOUSAND DOLLARS THE AMOUNT THE FUND PAYS IN EXCESS OF IN THE AGGREGATE FOR ONE YEAR; TO AMEND SECTION 56-9-20, AS AMENDED, RELATING TO DEFINITIONS USED IN CONNECTION WITH MOTOR VEHICLE FINANCIAL RESPONSIBILITY ACT, SO AS TO INCREASE THE MINIMUM LIMITS FOR PROPERTY DAMAGE FROM FIVE TO TEN THOUSAND DOLLARS; TO AMEND ACT 313 OF 2002, RELATING TO MINIMUM VALUES ON CERTAIN ANNUITIES, SO AS TO EXTEND THE EFFECTIVE DATE THROUGH JUNE 30, 2005; TO AMEND SECTION 38-75-460, RELATING TO THE AUTHORITY OF THE DIRECTOR TO EXPAND THE AREA IN WHICH THE ASSOCIATION MUST PROVIDE ESSENTIAL PROPERTY INSURANCE, SO AS TO REDEFINE THE EXPANSION PARAMETERS AND PROVIDE THE DIRECTOR'S POWERS AND DUTIES; AND TO AMEND SECTION 42-7-310, AS AMENDED, RELATING TO FUNDING OF THE WORKERS' COMPENSATION SECOND INJURY FUND, SO AS TO DELETE THE THIRTY-DAY REQUIREMENT AND PROVIDE THAT FAILURE TO PAY THE ASSESSMENT AND PENALTY BARS RECOVERY FROM THE FUND; TO AMEND SECTION 42-9-400, AS AMENDED, RELATING TO THE MANNER IN WHICH AN EMPLOYER OR INSURANCE CARRIER IS REIMBURSED FROM THE SECOND INJURY FUND WHEN A DISABILITY RESULTS FROM A PREEXISTING IMPAIRMENT AND SUBSEQUENT INJURY, SO AS TO DELETE THE REQUIREMENT THAT THE EXISTENCE OF THE CONDITION BE UNKNOWN TO THE EMPLOYEE; TO AMEND SECTION 42-9-410, RELATING TO NOTICE OF PREEXISTING PERMANENT PHYSICAL IMPAIRMENT TO RECEIVE ADDITIONAL BENEFITS FROM THE SECOND INJURY FUND, SO AS TO CHANGE THE REQUIREMENT FROM NOTICE TO KNOWLEDGE OF THE EMPLOYEE'S PREEXISTING PERMANENT PHYSICAL IMPAIRMENT; TO AMEND SECTIONS 38-90-10, 38-90-20, 38-90-40, 38-90-50, 38-90-60, 38-90-140, ALL AS AMENDED, AND SECTION 38-90-200, RELATING TO CAPTIVE INSURANCE COMPANIES, SO AS TO, AMONG OTHER THINGS, AUTHORIZE CAPTIVE INSURANCE COMPANIES TO FORM AS LIMITED LIABILITY COMPANIES, TO IMPOSE A FEE FOR THE USE OF INTERNAL RESOURCES TO EXAMINE AND INVESTIGATE APPLICATIONS FOR LICENSURE, TO INCREASE THE ANNUAL RENEWAL LICENSE FEE, TO ADD A FEE TO RECOVER REASONABLE COSTS OF PROCESSING CERTIFICATIONS, AND TO LIMIT PREMIUM TAXES TO ONE HUNDRED THOUSAND DOLLARS ANNUALLY FOR DIRECT PREMIUM AND ASSUMED REINSURANCE PREMIUMS; TO AMEND SECTION 38-74-10, AS AMENDED, RELATING TO DEFINITIONS IN THE HEALTH INSURANCE POOL, SO AS TO DEFINE "QUALIFIED TAA ELIGIBLE INDIVIDUAL"; AND TO AMEND SECTION 38-74-30, AS AMENDED, RELATING TO ELIGIBILITY FOR HEALTH INSURANCE POOL COVERAGE, SO AS TO EXEMPT FROM THE THIRTY-DAY REQUIREMENT AND WAIVE THE PREEXISTING CONDITION EXCLUSION FOR A QUALIFIED TAA ELIGIBLE INDIVIDUAL.
Be it enacted by the General Assembly of the State of South Carolina:
Definition revised
SECTION 1. Section 38-1-20(40) of the 1976 Code, as last amended by Act 300 of 2002, is further amended to read:
"(40) 'Exempt commercial policies' means policies for commercial insureds as may be provided for in regulation issued by the director. Exempt commercial policies include all property and casualty coverages except for insurance related to credit transactions written through financial institutions."
Premium tax based on policies written
SECTION 2. Section 38-7-20 of the 1976 Code is amended to read:
"Section 38-7-20. (A) In addition to all license fees and taxes otherwise provided by law, there is levied upon each insurance company licensed by the director or his designee an insurance premium tax based upon total premiums, other than workers' compensation insurance premiums, and annuity considerations, written by the company in the State during each calendar year ending on the thirty-first day of December. For life insurance, the insurance premium tax levied herein is equal to three-fourths of one percent of the total premiums written. For all other types of insurance, the insurance premium tax levied in this section is equal to one and one-fourth percent of the total premiums written. In computing total premiums, return premiums on risks and dividends paid or credited to policyholders are excluded.
(B) The insurance premium taxes collected by the director or his designee pursuant to this section must be deposited by him in the general fund of the State."
Reporting time revised
SECTION 3. Section 38-21-170(A) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(A) Subject to Section 38-21-270, each registered insurer shall report to the department all dividends and other distributions to shareholders within five business days following the declaration of it and at least fifteen days before the payment of it. The department promptly shall consider this report as information, and these considerations must include the factors as provided in Section 38-21-260. If an insurer's surplus as regards policyholders is determined by the department not to be reasonable in relation to the insurer's outstanding liabilities and adequate to its financial needs, the department shall have the authority, within the fifteen-day period before payment of it, to limit the amount of the dividends or distributions."
Determination of dividend clarified
SECTION 4. Section 38-21-270(B) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(B)(1) For purposes of this section, an extraordinary dividend or distribution includes a dividend or distribution of cash or other property whose fair market value together with that of other dividends or distributions made within the preceding twelve months:
(a) when paid from other than earned surplus exceeds the lesser of:
(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or
(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement;
(b) when paid from earned surplus exceeds the greater of:
(i) ten percent of the insurer's surplus as regards policyholders as shown in the insurer's most recent annual statement; or
(ii) the net gain from operations for life insurers, or the net income, for nonlife insurers, not including net realized capital gains or losses as shown in the insurer's most recent annual statement.
(2) It does not include pro rata distributions of a class of the insurer's own securities."
Code citation corrected
SECTION 5. Section 38-41-60(c) of the 1976 Code is amended to read:
"(c) Investment of plan funds is subject to the same restrictions which are applicable to insurers pursuant to Sections 38-12-10 through 38-12-320. All investments must be managed by a bank or other investment organization licensed to operate in South Carolina."
Code citation corrected
SECTION 6. Section 38-43-10(B) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(B) This chapter does not apply to excess and surplus lines brokers licensed pursuant to Section 38-45-30 except as provided in Section 38-43-70."
Department approval of producers appointed, deleted
SECTION 7. Section 38-43-40 of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"Section 38-43-40. A license issued by the director or his designee pursuant to Chapter 5 of this title gives to the insurer obtaining it the right to appoint any number of producers to take risks or transact any business of insurance in the State. The notification to the director or his designee must give both the business address and residence addresses of the producer."
Appointment of producer by insurer, deleted
SECTION 8. Section 38-43-50(B) of the 1976 Code, as added by Act 323 of 2002, is amended to read:
"(B) When appointing a producer, the insurer shall certify on a form prescribed by the director whether the applicant has been appointed a producer to represent it and that it has duly investigated the character and record of the applicant and has satisfied itself that he is trustworthy and qualified to act as its producer and intends to hold himself out in good faith as an insurance producer. An insurance producer shall not act as an agent of an insurer unless the insurance producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed."
Code citation corrected
SECTION 9. Section 38-43-70(D) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(D) Notwithstanding any other provision of this section, a person licensed as a surplus lines broker in his home state shall receive a nonresident surplus lines broker license pursuant to subsection (A) of this section. Except as to subsection (A) of this section, nothing in this section otherwise amends or supersedes any provision of Section 38-45-30."
Waiver of examination clarified
SECTION 10. Section 38-43-100(A) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(A) Business may not be done by the applicant except following issuance of a producer's license, and the license may not be issued until the director or his designee has determined that the applicant is qualified as an insurance producer, generally, and is particularly qualified for the line of business in which the applicant proposes to engage. The department shall promulgate regulations setting forth qualifying standards of producers as to all lines of business and shall require the producer applicant to stand a written examination. For the purpose of interstate reciprocity, the department shall identify by bulletin which limited lines or limited lines credit insurance are approved in South Carolina and which are exempt from examination. The director or his designee may waive the examination with respect to applicants who have achieved the designations of Chartered Property and Casualty Underwriter (CPCU) or Chartered Life Underwriter (CLU). A bank, finance company, or other company handling credit transactions operating in this State and utilizing one or more credit life or accident and health or credit property producers in a particular geographical area who are licensed without having taken the written examination is required to have readily available at least one credit life or accident and health or credit property producer to answer customers' questions concerning credit life, credit accident and health insurance, or credit property, or any combination of these."
Compliance requirements clarified
SECTION 11. Section 38-43-105(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) Each course sponsor is required to submit a nonrefundable filing fee established by the department."
Reciprocal continuing education requirements clarified
SECTION 12. Section 38-43-106(E) of the 1976 Code, as last amended by Act 323 of 2002, is further amended to read:
"(E) This section also applies to nonresident producers unless otherwise provided in this section. However, a nonresident producer who successfully satisfies continuing insurance education requirements of his home state and certifies this information to the continuing education administrator as specified in subsection (C) is considered to have satisfied the requirements of this section regardless of the requirements of that other state."
Insurance broker licensure requirement revised
SECTION 13. Section 38-45-20 of the 1976 Code is amended to read:
"Section 38-45-20. A resident may be licensed as an insurance broker by the director or his designee if the following requirements are met:
(1) licensure of the resident as an insurance producer and having at least one appointment for the same lines of insurance for which he proposes to apply as a broker of this State;
(2) successful completion of classroom insurance courses approved by the director or his designee consisting of no less than twelve classroom hours, which must be in addition to the requirements for a producer license contained in Section 38-43-105. The course subjects must be related to broker or surplus lines activities as approved by the director or his designee;
(3) payment of a biennial license fee of two hundred dollars which is earned fully when received, not refundable;
(4) filing of a bond with the department in a form approved by the Attorney General in favor of South Carolina of ten thousand dollars executed by a corporate surety licensed to transact surety insurance in this State and personally countersigned by a licensed resident agent of the surety. The bond must be conditioned to pay a person insured or seeking insurance through the broker who sustains loss as a result of:
(a) the broker's violation of or failure to comply with an insurance law or regulation of this State;
(b) the broker's failure to transmit properly a payment received by him, cash or credit, for transmission to an insurer or an insured; or
(c) an act of fraud committed by the broker in connection with an insurance transaction. Instead of a bond, the broker may file with the department certificates of deposit of ten thousand dollars of building and loan associations or federal savings and loan associations located within the State in which deposits are guaranteed by the Federal Savings and Loan Insurance Corporation, not to exceed the amount of insurance, or of banks located within the State in which deposits are guaranteed by the Federal Deposit Insurance Corporation, not to exceed the amount of insurance. An aggrieved person may institute an action in the county of his residence against the broker or his surety, or both, to recover on the bond or against the broker to recover from the certificates of deposit, and a copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action;
(5) payment to the department, within thirty days after March thirty-first, June thirtieth, September thirtieth, and December thirty-first each year, of a broker's premium tax of four percent upon premiums for policies of insurers not licensed in this State. Credit may be taken for tax on policies canceled flat within forty-five days of the effective policy date as long as the business was placed in good faith and the policy was canceled at the request of the insured."
Requirement to furnish surety bond deleted
SECTION 14. Section 38-45-30(5) of the 1976 Code is amended to read:
"(5) An aggrieved person may institute an action in the county of his residence against the broker to recover damages. A copy of the summons and complaint in the action must be served on the director, who is not required to be made a party to the action."
Date extended
SECTION 15. Section 38-71-880(F) of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"(F) This section shall not apply to benefits for services furnished on or after December 31, 2003."
Automobile liability risk assignment available to military personnel
SECTION 16. Section 38-77-870 of the 1976 Code is amended to read:
"Section 38-77-870. The provisions of this chapter relevant to the assignment of risks must be available to nonresidents who are unable to obtain a policy of motor vehicle liability, physical damage, and medical payments insurance with respect only to motor vehicles registered and used in the State. Provided, however, that assignment through the South Carolina Automobile Insurance Plan also must be available to personnel of the Armed Forces of the United States who are on active duty and who officially are stationed in this State if they possess a valid motor vehicle driver's license issued by another state or territory of the United States or by the District of Columbia, regardless of the state of registration of their motor vehicle, if their motor vehicle is garaged principally in this State."
Threshold increased for payment of excess medical malpractice judgments
SECTION 17. Section 38-79-420 of the 1976 Code is amended to read:
"Section 38-79-420. There is created the South Carolina Patients' Compensation Fund (fund) for the purpose of paying that portion of a medical malpractice or general liability claim, settlement, or judgment which is in excess of two hundred thousand dollars for each incident or in excess of six hundred thousand dollars in the aggregate for one year. The fund is liable only for payment of claims against licensed health care providers (providers) in compliance with the provisions of this article and includes reasonable and necessary expenses incurred in payment of claims and the fund's administrative expense."
Definition revised
SECTION 18. Section 56-9-20(11) of the 1976 Code, as last amended by Act 459 of 1996, is further amended to read:
"(11) 'Proof of financial responsibility': Proof of ability to respond to damages for liability, as provided in Section 38-77-150, or, on account of accidents occurring after the effective date of this proof, arising out of the ownership, maintenance, or use of a motor vehicle in the amount of fifteen thousand dollars because of bodily injury to or death of one person in any one accident and, subject to this limit for one person, in the amount of thirty thousand dollars because of bodily injury to or death of two or more persons in any one accident and in the amount of ten thousand dollars because of injury to or destruction of property of others in any one accident;"
Date extended
SECTION 19. The first paragraph of Section 2 of Act 313 of 2002 is amended to read:
"Notwithstanding the interest rate provisions of Section 38-69-240(a) of the 1976 Code, for prospective sales of contracts entered into pursuant to Section 38-69-240 from this act's effective date through June 30, 2005, the following applies:"
Criteria revised for expanding area and manner for providing essential property insurance
SECTION 20. Section 38-75-460 of the 1976 Code is amended to read:
"Section 38-75-460. The director or his designee, by written order, temporarily may expand the area in which the association shall provide essential property insurance. The director or his designee shall find and declare the existence of an emergency because of the unavailability of coastal property insurance or other unavailability of coastal property insurance on a reasonable basis through normal channels. The order must include the surveys of the market conducted in order to make the determination. The director or his designee may expand the area in which the association shall provide essential property insurance to the whole area or just part of the area. The director may expand the area by construction type or age of construction. The area may not be expanded further than the seacoast territory as defined in Section 38-75-310(7) and may not be expanded to cover the area for more than twenty-four months. If the director or his designee issues an order that expands the area in which the association provides essential property insurance, he shall notify the General Assembly of that order and he shall recommend to the General Assembly any appropriate statutory changes in the law concerning the definition of 'coastal area' which he believes needs to be enacted."
Sanctions revised for failure to timely pay assessment and penalty
SECTION 21. Section 42-7-310(d)(2) of the 1976 Code, as last amended by Act 364 of 2000, is further amended to read:
"(2) equitable assessments upon each carrier which, as used in this section, includes all insurance carriers, self-insurers, and the State Accident Fund. Each carrier shall make payments to the fund in an amount equal to that proportion of one hundred seventy-five percent of the total disbursement made from the fund during the preceding fiscal year less the amount of net assets in the fund as of June thirtieth of the preceding fiscal year which the normalized premium of each carrier bore to the normalized premium of all carriers during the preceding calendar year. Each insurance carrier, self-insurer, and the State Accident Fund shall make payment based upon workers' compensation normalized premiums during the preceding calendar year. The charge to each insurance carrier is a charge based upon normalized premiums. An employer who has ceased to be a self-insurer shall continue to be liable for any assessments into the fund on account of any benefits paid by him during such calendar year. Any assessment levied or established in accordance with this section constitutes a personal debt of every employer or insurance carrier so assessed and is due and payable to the Second Injury Fund when payment is called for by the fund. In the event of failure to pay any assessment upon the date determined by the fund, the employer or insurance carrier may immediately be assessed a penalty in an amount not exceeding ten percent of the unpaid assessment. If the employer or insurance carrier fails to pay the assessment and penalty, they shall be barred from any recovery from the fund on all claims without exception until the assessment and penalty are paid in full. The director may file a complaint for collection against the employer or insurance carrier in a court of competent jurisdiction for the assessment, penalty, and interest at the legal rate, and the employer/carrier is responsible for attorney's fees and costs. The penalty and interest under this subsection are payable to the Second Injury Fund. At the time of the filing of the complaint, the fund shall also notify the South Carolina Department of Insurance and the South Carolina Workers' Compensation Commission, and these government agencies shall take the appropriate legal and administrative action immediately."
Reimbursement criteria revised
SECTION 22. Section 42-9-400(c) of the 1976 Code is amended to read:
"(c) In order to qualify under this section for reimbursement from the Second Injury Fund, the employer must establish when claim is made for reimbursement thereunder, that the employer had knowledge of the permanent physical impairment at the time that the employee was hired, or at the time the employee was retained in employment after the employer acquired such knowledge. However, the employer may qualify for reimbursement hereunder upon proof that he did not have prior knowledge of the employee's preexisting physical impairment because the existence of the condition was concealed by the employee."
Criteria to obtain additional benefits revised
SECTION 23. Section 42-9-410(d) of the 1976 Code is amended to read:
"(d) In order to receive additional benefits from the Second Injury Fund as permitted by Sections 42-9-150 and 42-9-170, the employer shall establish that he had knowledge of the employee's preexisting permanent physical impairment prior to the time of the subsequent injury by accident, unless the employer can establish that he did not have prior knowledge of the employee's preexisting physical impairment because the existence of the condition was concealed by the employee."
Various insurance provisions revised
SECTION 24. A. Section 38-90-10(3), (10), (11), (12), (18), (19), and (20) of the 1976 Code, as last amended by Act 58 of 2001, is further amended to read:
"(3) 'Association' means a legal association of individuals, corporations, limited liability companies, partnerships, or associations that has been in continuous existence for at least one year:
(a) the member organizations of which collectively, or which does itself:
(i) own, control, or hold with power to vote all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer or organized as a limited liability company; or
(ii) have complete voting control over an association captive insurance company organized as a mutual insurer; or
(b) the member organizations of which collectively constitute all of the subscribers of an association captive insurance company formed as a reciprocal insurer.
(10) 'Consolidated debt to total capital ratio' means the ratio of the sum of (a) all debts and hybrid capital instruments including, but not limited to, all borrowings from banks, all senior debt, all subordinated debts, all trust preferred shares, and all other hybrid capital instruments that are not included in the determination of consolidated GAAP net worth issued and outstanding to (b) total capital, consisting of all debts and hybrid capital instruments as described in subitem (a) plus owners' equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.
(11) 'Consolidated GAAP net worth' means the consolidated owners' equity determined in accordance with GAAP for reporting to the United States Securities and Exchange Commission.
(12) 'Controlled unaffiliated business' means a company:
(a) that is not in the corporate system of a parent and affiliated companies;
(b) that has an existing contractual relationship with a parent or affiliated company; and
(c) whose risks are managed by a captive insurance company in accordance with Section 38-90-190.
(18) 'Industrial insured group' means a group that meets either of the following criteria:
(a) a group of industrial insureds that collectively:
(i) own, control, or hold with power to vote all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer or limited liability company; or
(ii) have complete voting control over an industrial insured captive insurance company incorporated as a mutual insurer; or
(b) a group which is created under the Liability Risk Retention Act of 1986 15 U.S.C. Section 3901, et seq., as amended, as a corporation or other limited liability association taxable as a stock insurance company or a mutual insurer under this title.
(19) 'Member organization' means any individual, corporation, limited liability company, partnership, or association that belongs to an association.
(20) 'Parent' means any corporation, limited liability company, partnership, or individual that directly or indirectly owns, controls, or holds with power to vote more than fifty percent of the outstanding voting securities of a captive insurance company."
B. Section 38-90-20 of the 1976 Code, as last amended by Act 228 of 2002, is further amended to read:
"Section 38-90-20. (A) A captive insurance company, when permitted by its articles of incorporation, articles of organization, operating agreement, or charter, may apply to the director for a license to do any and all insurance, except workers' compensation insurance, authorized by this title; however:
(1) a pure captive insurance company may not insure any risks other than those of its parent, affiliated companies, controlled unaffiliated business, or a combination of them;
(2) an association captive insurance company may not insure any risks other than those of the member organizations of its association and their affiliated companies;
(3) an industrial insured captive insurance company may not insure any risks other than those of the industrial insureds that comprise the industrial insured group and their affiliated companies;
(4) in general, a special purpose captive insurance company only may insure the risks of its parent. Notwithstanding any other provisions of this chapter, a special purpose captive insurance company may provide insurance or reinsurance, or both, for risks as approved by the director;
(5) a captive insurance company may not provide personal motor vehicle or homeowner's insurance coverage or any component of these coverages;
(6) a captive insurance company may not accept or cede reinsurance except as provided in Section 38-90-110.
(B) To conduct insurance business in this State a captive insurance company shall:
(1) obtain from the director a license authorizing it to conduct insurance business in this State;
(2) hold at least one board of directors meeting, or in the case of a reciprocal insurer, a subscriber's advisory committee meeting, or in the case of a limited liability company a meeting of the managing board, each year in this State;
(3) maintain its principal place of business in this State, or in the case of a branch captive insurance company, maintain the principal place of business for its branch operations in this State; and
(4) appoint a resident registered agent to accept service of process and to otherwise act on its behalf in this State. In the case of a captive insurance company:
(a) formed as a corporation or a limited liability company, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served;
(b) formed as a reciprocal insurer, whenever the registered agent cannot with reasonable diligence be found at the registered office of the captive insurance company, the director must be an agent of the captive insurance company upon whom any process, notice, or demand may be served.
(C)(1) Before receiving a license, a captive insurance company:
(a) formed as a corporation, shall file with the director a certified copy of its charter and bylaws, a statement under oath of its president and secretary showing its financial condition, and any other statements or documents required by the director;
(b) formed as a limited liability company, shall file with the director a certified copy of its articles of organization and operating agreement, a statement under oath by its managers showing its financial condition, and any other statements or documents required by the director;
(c) formed as a reciprocal shall:
(i) file with the director a certified copy of the power of attorney of its attorney-in-fact, a certified copy of its subscribers' agreement, a statement under oath of its attorney-in-fact showing its financial condition, and any other statements or documents required by the director; and
(ii) submit to the director for approval a description of the coverages, deductibles, coverage limits, and rates and any other information the director may reasonably require. If there is a subsequent material change in an item in the description, the reciprocal captive insurance company shall submit to the director for approval an appropriate revision and may not offer any additional kinds of insurance until a revision of the description is approved by the director. The reciprocal captive insurance company shall inform the director of any material change in rates within thirty days of the adoption of the change.
(2) In addition to the information required by (C)(1), an applicant captive insurance company shall file with the director evidence of:
(a) the amount and liquidity of its assets relative to the risks to be assumed;
(b) the adequacy of the expertise, experience, and character of the person or persons who will manage it;
(c) the overall soundness of its plan of operation;
(d) the adequacy of the loss prevention programs of its parent, member organizations, or industrial insureds as applicable; and
(e) such other factors considered relevant by the director in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
(3) In addition to the information required by (C)(1) and (C)(2) an applicant sponsored captive insurance company shall file with the director:
(a) a business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the director, and how it will report the experience to the director;
(b) a statement acknowledging that all financial records of the sponsored captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the director;
(c) all contracts or sample contracts between the sponsored captive insurance company and any participants; and
(d) evidence that expenses will be allocated to each protected cell in an equitable manner.
(4) Information submitted pursuant to this subsection is confidential and may not be made public by the director or an agent or employee of the director without the written consent of the company, except that:
(a) information may be discoverable by a party in a civil action or contested case to which the captive insurance company that submitted the information is a party, upon a showing by the party seeking to discover the information that:
(i) the information sought is relevant to and necessary for the furtherance of the action or case;
(ii) the information sought is unavailable from other nonconfidential sources; and
(iii) a subpoena issued by a judicial or administrative officer of competent jurisdiction has been submitted to the director; however, the provisions of subsection (C)(4) do not apply to an industrial insured captive insurance company insuring the risks of an industrial insured group; and
(b) the director may disclose the information to a public officer having jurisdiction over the regulation of insurance in another state if:
(i) the public official agrees in writing to maintain the confidentiality of the information; and
(ii) the laws of the state in which the public official serves require the information to be confidential.
(D)(1) A captive insurance company shall pay to the department a nonrefundable fee of two hundred dollars for processing its application for license. In addition, the director may retain legal, financial, and examination services from outside the department to examine and investigate the application, the reasonable cost of which may be charged against the applicant or the director may use internal resources to examine and investigate the application for a fee of two thousand four hundred dollars.
(2) Section 38-13-60 applies to examinations, investigations, and processing conducted pursuant to the authority of this section.
(3) In addition, a captive insurance company shall pay a license fee for the year of registration of three hundred dollars and an annual renewal fee of five hundred dollars.
(4) The department may charge a fifteen-dollar fee for any document requiring certification of authenticity or the signature of the director or his designee.
(E) If the director is satisfied that the documents and statements filed by the captive insurance company comply with the provisions of this chapter, the director may grant a license authorizing the company to do insurance business in this State until March first at which time the license may be renewed.
(F) The terms and conditions set forth in Section 38-5-170 apply in full to captive insurance companies licensed under this chapter."
C. Section 38-90-40(A) of the 1976 Code, as last amended by Act 188 of 2002, is further amended to read:
"(A) The director may not issue a license to a captive insurance company unless the company possesses and maintains unimpaired paid-in capital of:
(1) in the case of a pure captive insurance company, not less than one hundred thousand dollars;
(2) in the case of an association captive insurance company incorporated as a stock insurer or organized as a limited liability company, not less than four hundred thousand dollars;
(3) in the case of an industrial insured captive insurance company incorporated as a stock insurer or organized as a limited liability company, not less than two hundred thousand dollars;
(4) in the case of a sponsored captive insurance company, not less than five hundred thousand dollars;
(5) in the case of a special purpose captive insurance company, an amount determined by the director after giving due consideration to the company's business plan, feasibility study, and pro-formas, including the nature of the risks to be insured.
The capital may be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System and approved by the director."
D. Section 38-90-50(A) of the 1976 Code, as last amended by Act 188 of 2002, is further amended to read:
"(A) The director may not issue a license to a captive insurance company unless the company possesses and maintains free surplus of:
(1) in the case of a pure captive insurance company, not less than one hundred fifty thousand dollars;
(2) in the case of an association captive insurance company incorporated as a stock insurer or organized as a limited liability company, not less than three hundred fifty thousand dollars;
(3) in the case of an industrial insured captive insurance company incorporated as a stock insurer or organized as a limited liability company, not less than three hundred thousand dollars;
(4) in the case of an association captive insurance company incorporated as a mutual insurer, not less than seven hundred fifty thousand dollars;
(5) in the case of an industrial insured captive insurance company incorporated as a mutual insurer, not less than five hundred thousand dollars;
(6) in the case of a sponsored captive insurance company, not less than five hundred thousand dollars; and
(7) in the case of a special purpose captive insurance company, an amount determined by the director after giving due consideration to the company's business plan, feasibility study, and pro-formas, including the nature of the risks to be insured.
The surplus may be in the form of cash, cash equivalent, or an irrevocable letter of credit issued by a bank chartered by this State or a member bank of the Federal Reserve System and approved by the director."
E. Section 38-90-60 of the 1976 Code, as last amended by Act 82 of 2001, is further amended to read:
"Section 38-90-60. (A) A pure captive insurance company or a sponsored captive insurance company may be:
(1) incorporated as a stock insurer with its capital divided into shares and held by the stockholders; or
(2) organized as a limited liability company with its capital divided into capital accounts and held by its members.
(B) An association captive insurance company or an industrial insured captive insurance company may be:
(1) incorporated as a stock insurer with its capital divided into shares and held by the stockholders;
(2) organized as a limited liability company with its capital divided into capital accounts and held by its members;
(3) incorporated as a mutual insurer without capital stock, the governing body of which is elected by the member organizations of its association; or
(4) organized as a reciprocal insurer in accordance with Chapter 17.
(C) A captive insurance company may not have fewer than three incorporators or organizers of whom not fewer than two must be residents of this State.
(D) In the case of a captive insurance company formed as a corporation or a limited liability company, before the articles of incorporation or articles of organization are transmitted to the Secretary of State, the incorporators or organizers shall petition the director to issue a certificate setting forth a finding that the establishment and maintenance of the proposed entity will promote the general good of the State. In arriving at this finding the director shall consider:
(1) the character, reputation, financial standing, and purposes of the incorporators or organizers;
(2) the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors or managers; and
(3) other aspects as the director considers advisable.
(E) The articles of incorporation or articles of organization, the certificate issued pursuant to subsection (D), and the organization fees required by Section 33-1-220 must be transmitted to the Secretary of State, who shall record both the articles of incorporation or articles of organization and the certificate.
(F) In the case of a captive insurance company formed as a reciprocal insurer, the organizers shall petition the director to issue a certificate setting forth the director's finding that the establishment and maintenance of the proposed association will promote the general good of the State. In arriving at this finding the director shall consider:
(1) the character, reputation, financial standing, and purposes of the incorporators or organizers;
(2) the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors or managers; and
(3) other aspects the director considers advisable.
(G) In the case of a captive insurance company licensed as a branch captive insurance company, the alien captive insurance company shall petition the director to issue a certificate setting forth the director's finding that, after considering the character, reputation, financial responsibility, insurance experience, and business qualifications of the officers and directors or managers of the alien captive insurance company, the licensing and maintenance of the branch operations will promote the general good of the State. The alien captive insurance company may register to do business in this State after the director's certificate has been issued.
(H) The capital stock or membership interests of a captive insurance company incorporated as a stock insurer or limited liability company must be issued at not less than par value.
(I) In the case of a captive insurance company formed as a corporation, at least one of the members of the board of directors of a captive insurance company incorporated in this State must be a resident of this State.
(J) In the case of a captive insurance company formed as a limited liability company, at least one of the managers of the captive insurance company must be a resident of this State.
(K) In the case of a captive insurance company formed as a reciprocal insurer, at least one of the members of the subscribers' advisory committee must be a resident of this State.
(L) A captive insurance company formed as a corporation or a limited liability company, pursuant to the provisions of this chapter has the privileges and is subject to the provisions of the general corporation law, including the Uniform Limited Liability Company Act of 1996 for limited liability companies, as well as the applicable provisions contained in this chapter. If a conflict occurs between a provision of the general corporation law, including the Uniform Limited Liability Company Act of 1996 for limited liability companies, and a provision of this chapter, the latter controls. The provisions of this title pertaining to mergers, consolidations, conversions, mutualizations, and redomestications apply in determining the procedures to be followed by a captive insurance company in carrying out any of the transactions described in those provisions, except the director may waive or modify the requirements for public notice and hearing in accordance with regulations which the director may promulgate addressing categories of transactions. If a notice of public hearing is required, but no one requests a hearing, the director may cancel the hearing.
(M)(1) A captive insurance company formed as a reciprocal insurer pursuant to the provisions of this chapter has the privileges and is subject to Chapter 17 in addition to the applicable provisions of this chapter. If a conflict occurs between the provisions of Chapter 17 and the provisions of this chapter, the latter controls. To the extent a reciprocal insurer is made subject to other provisions of this title pursuant to Chapter 17, the provisions are not applicable to a reciprocal insurer formed pursuant to the provisions of this chapter unless the provisions are expressly made applicable to a captive insurance company pursuant to the provisions of this chapter.
(2) In addition to the provisions of item (1), a captive insurance company organized as a reciprocal insurer that is an industrial insured group has the privileges and is subject to the provisions of Chapter 17 in addition to applicable provisions of this title.
(N) The articles of incorporation or bylaws of a captive insurance company may authorize a quorum of a board of directors to consist of no fewer than one-third of the fixed or prescribed number of directors as provided for in Section 33-8-240(b). In the case of a limited liability company, the articles of organization or operating agreement of a captive insurance company may authorize a quorum to consist of no fewer than one-third of the managers required by the articles of organization or the operating agreement."
F. Section 38-90-140(A), (B), and (F) of the 1976 Code, as last amended by Act 82 of 2001, is further amended to read:
"(A) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of four-tenths of one percent on the first twenty million dollars and three-tenths of one percent on each dollar after that, up to a maximum tax of one hundred thousand dollars. Taxes are based on the direct premiums written or contracted for on policies or contracts of insurance written by the captive insurance company during the year ending December thirty-first next preceding, after deducting from the direct premiums subject to the tax the amounts paid to policyholders as return premiums which must include dividends on unabsorbed premiums or premium deposits returned or credited to policyholders.
(B) A captive insurance company shall pay to the department by March first of each year, a tax at the rate of two hundred and twenty-five thousandths of one percent on the first twenty million dollars of assumed reinsurance premium, and one hundred fifty thousandths of one percent on the next twenty million dollars and fifty thousandths of one percent on the next twenty million dollars and twenty-five thousandths of one percent of each dollar of assumed reinsurance premium after that up to a maximum tax of one hundred thousand dollars. However, no reinsurance tax applies to premiums for risks or portions of risks which are subject to taxation on a direct basis pursuant to subsection (A). A premium tax is not payable in connection with the receipt of assets in exchange for the assumption of loss reserves and other liabilities of another insurer under common ownership and control if the transaction is part of a plan to discontinue the operations of the other insurer and if the intent of the parties to the transaction is to renew or maintain business with the captive insurance company.
(F) For the purposes of this section, 'common ownership and control' means:
(1) in the case of stock corporations or limited liability companies, the direct or indirect ownership of eighty percent or more of the outstanding voting stock or membership interests of two or more corporations or limited liability companies by the same person or entity; and
(2) in the case of mutual corporations, the direct or indirect ownership of eighty percent or more of the surplus and the voting power of two or more corporations by the same member or members."
G. Section 38-90-200 of the 1976 Code is amended to read:
"Section 38-90-200. (A) An association captive insurance company or industrial insured group formed as a stock or mutual corporation, or a limited liability company may be converted to or merged with and into a reciprocal insurer in accordance with a plan and the provisions of this section.
(B) A plan for this conversion or merger:
(1) must be fair and equitable to the:
(a) shareholders, in the case of a stock insurer;
(b) members, in the case of a limited liability company; or
(c) policyholders, in the case of a mutual insurer; and
(2) must provide for the purchase of the shares of any nonconsenting shareholder of a stock insurer, of the member interest of any nonconsenting member of a limited liability company, of the policyholder interest of any nonconsenting policyholder of a mutual insurer in substantially the same manner and subject to the same rights and conditions as are accorded a dissenting shareholder, dissenting member, or a dissenting policyholder pursuant to the provisions of Chapter 13 or Chapter 44, Title 33. Provided, however, that the merger of a limited liability company requires the consent of all members unless this requirement has been waived in an operating agreement signed by all of the members of the limited liability company.
(C) In the case of a conversion authorized pursuant to the provisions of subsection (A):
(1) the conversion must be accomplished under a reasonable plan and procedure as may be approved by the director; however, the director may not approve the plan of conversion unless the plan:
(a) satisfies the provisions of subsection (B);
(b) provides for a hearing, of which notice has been given to the insurer, its directors, officers, and stockholders, in the case of a stock insurer; members and managers, in the case of a limited liability company; or policyholders, in the case of a mutual insurer, all of whom have the right to appear at the hearing, except that the director may waive or modify the requirements for the hearing; however, if a notice of hearing is required, but no hearing is requested, the director may cancel the hearing;
(c) provides for the conversion of existing stockholder, member, or policyholder interests into subscriber interests in the resulting reciprocal insurer, proportionate to stockholder, member, or policyholder interests in the stock or mutual insurer or limited liability company; and
(d) is approved:
(i) in the case of a stock insurer or limited liability company, by a majority of the shares or interests entitled to vote represented in person or by proxy at a duly called regular or special meeting at which a quorum is present;
(ii) in the case of a mutual insurer, by a majority of the voting interests of policyholders represented in person or by proxy at a duly called regular or special meeting at which a quorum is present;
(2) the director shall approve the plan of conversion if the director finds that the conversion will promote the general good of the State in conformity with those standards provided in Section 38-90-60(2);
(3) if the director approves the plan, the director shall amend the converting insurer's certificate of authority to reflect conversion to a reciprocal insurer and issue the amended certificate of authority to the company's attorney-in-fact;
(4) upon issuance of an amended certificate of authority of a reciprocal insurer by the director, the conversion is effective; and
(5) upon the effectiveness of the conversion, the corporate existence of the converting insurer shall cease and the resulting reciprocal insurer shall notify the Secretary of State of the conversion.
(D) A merger authorized pursuant to the provisions of subsection (A) must be accomplished substantially in accordance with the procedures provided in this title except that, only for purposes of the merger:
(1) the plan or merger must satisfy subsection (B);
(2) the subscribers' advisory committee of a reciprocal insurer must be equivalent to the board of directors of a stock or mutual insurance company or the managers of a limited liability company;
(3) the subscribers of a reciprocal insurer must be the equivalent of the policyholders of a mutual insurance company;
(4) if a subscribers' advisory committee does not have a president or secretary, the officers of the committee having substantially equivalent duties are considered the president and secretary of the committee;
(5) the director shall approve the articles of merger if the director finds that the merger will promote the general good of the State in conformity with those standards provided in Section 38-90-60(D)(2). If the director approves the articles of merger, the director shall endorse his or her approval on the articles and the surviving insurer shall present the name to the Secretary of State at the Secretary of State's office;
(6) notwithstanding Section 38-90-40, the director may permit the formation, without surplus, of a captive insurance company organized as a reciprocal insurer, into which an existing captive insurance company may be merged for the purpose of facilitating a transaction provided for in this section; however, there may be no more than one authorized insurance company surviving the merger;
(7) an alien insurer may be a party to a merger authorized pursuant to the provisions of subsection (A) if the requirements for the merger between a domestic and a foreign insurer pursuant to the provisions of Chapter 21 apply to a merger between a domestic and an alien insurer provided by this subsection. The alien insurer must be treated as a foreign insurer pursuant to the provisions of Chapter 21 and other jurisdictions must be the equivalent of a state for purposes of Chapter 21.
(E) A conversion or merger pursuant to the provisions of this section has all the effects set forth in Chapter 21, to the extent these effects are not inconsistent with this chapter."
H. Section 38-74-10 of the 1976 Code, as last amended by Act 240 of 2002, is further amended by adding an appropriately numbered item to read:
"( ) 'Qualified TAA eligible individual' means an individual who is eligible for the credit for health insurance costs under Section 35 of the Internal Revenue Code of 1986."
I. Section 38-74-30 of the 1976 Code, as last amended by Act 240 of 2002, is further amended to read:
"Section 38-74-30. (A) A person who is a resident of this State for thirty days, except that for a federally defined eligible individual or a Qualified TAA eligible individual, there shall not be a thirty-day requirement, and his newborn child is eligible for pool coverage:
(1) upon providing evidence of any of the following actions by an insurer on an application for health insurance comparable to that provided by the pool submitted on behalf of the person:
(a) a refusal to issue the insurance for health reasons;
(b) a refusal to issue the insurance except with a reduction or exclusion of coverage for a preexisting health condition for a period exceeding twelve months, unless it is determined that the person voluntarily terminated his or did not seek any health insurance coverage before being refused issuance except with a reduction or exclusion for a preexisting health condition, and then seeks to be eligible for pool coverage after the health condition develops. This determination must be made by the board;
(c) a refusal to issue insurance coverage comparable to that provided by the pool except at a rate exceeding one hundred fifty percent of the pool rate; or
(2) if the individual is a federally defined eligible individual or a Qualified TAA eligible individual, as defined in Section 38-74-10, who is and continues to be a resident of this State; or
(3) if the individual is covered under Medicare Parts A and B due to disability and is under age sixty-five.
(B) A person whose health insurance coverage is terminated involuntarily for any reason other than nonpayment of premium may apply for coverage under the plan but shall submit proof of eligibility according to subsection (A) of this section. If proof is supplied and if coverage is applied for within sixty days after the involuntary termination and if premiums are paid for the entire coverage period, the effective date of the coverage is the date of termination of the previous coverage. Waiting period and preexisting condition exclusions are waived to the extent to which similar exclusions, if any, have been satisfied under the prior health insurance coverage. The waiver does not apply to a person whose policy has been terminated or rescinded involuntarily because of a material misrepresentation.
(C) A person who is paying a premium for health insurance comparable to the pool plan in excess of one hundred fifty percent of the pool rate or who has received notice that the premium for a policy would be in excess of one hundred fifty percent of the pool rate may make application for coverage under the pool. The effective date of coverage is the date of the application, or the date that the premium is paid if later, and any waiting period or preexisting condition exclusion is waived to the extent to which similar exclusions, if any, were satisfied under the prior health insurance plan. Benefits payable under the pool plan are secondary to benefits payable by the previous plan. The board shall require an additional premium for coverage effected under the plan in this manner notwithstanding the premium limitation stated in Section 38-74-60.
(D)(1) The waiting period and preexisting condition exclusions are waived for a federally defined eligible individual.
(2) The waiting period and preexisting condition exclusions are waived for a Qualified TAA eligible individual if the individual maintained creditable coverage for an aggregate period of three months as of the date on which the individual seeks to enroll in pool coverage, not counting any period prior to a sixty-three-day break in coverage.
(E) A person not eligible for pool coverage is one who meets any one of the following criteria:
(1) a person who has coverage under health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible under subsection (C) of this section;
(2) a person who is eligible for health insurance comparable to that offered by the pool from an insurer or any other source except a person who would be eligible for pool coverage under Section 38-74-30(A)(1)(b), 38-74-30(A)(1)(c), 38-74-30(A)(2), or 38-74-30(A)(3);
(3) a person who at the time of pool application is eligible for health care benefits under state Medicaid or eligible for health care benefits under Medicare and age sixty-five or older;
(4) a person having terminated coverage in the pool unless twelve months have lapsed since termination unless termination was because of ineligibility, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(5) a person on whose behalf the pool has paid out one million dollars in benefits;
(6) inmates of public institutions and persons eligible for public programs, except that this item shall not apply with respect to an applicant who is a federally defined eligible individual;
(7) a person who fails to maintain South Carolina residency.
(F) A person who ceases to meet the eligibility requirements of this section may be terminated at the end of the policy period."
Time effective
SECTION 25. This act takes effect upon approval by the Governor, except Section 13 takes effect January 31, 2004.
Ratified the 5th day of June, 2003.
Approved the 25th day of June, 2003.
This web page was last updated on Monday, December 7, 2009 at 10:17 A.M.